Lately the White House has been boasting that its so-called stimulus measures have "created or saved" somewhere between 2.5 million and 3.6 million jobs. Yet some 2.3 million jobs have been lost since Barack Obama took office. What's the magic?
Daniel Mitchell, a tax reform expert with the Cato Institute, explains that the administration is justifying the job losses by asserting that the US economy "actually would have lost about 5 million jobs without the new government spending."
"I've decided to adopt this clever strategy to spice up my social life," writes Mitchell.
Next time I see my buddies, I'm going to claim that I enjoyed a week of debauchery with the Victoria's Secret models. And if any of them are rude enough to point out that I'm lying, I'll simply explain that I started with an assumption of spending -7 nights with the supermodels. And since I actually spent zero nights with them, that means a net of +7. Some of you may be wondering whether it makes sense to begin with an assumption of "-7 nights," but I figure that's okay since Keynesians begin with the assumption that you can increase your prosperity by transferring money from your left pocket to your right pocket.
Mitchell, of course, is a gentleman, so rather than sharing the intimate details of his nightly escapades, he quotes a Wall Street Journal editorial which similarly lambastes the White House's economic fantasies:
White House economists [...] said the unemployment rate would peak at 9% without the stimulus [...] and that with the stimulus the rate would stay at 8% or below. In other words, today there are 700,000 fewer jobs than [Christina] Romer predicted we would have if we had done nothing at all. If this is a job creation success, what does failure look like?
All of these White House jobs estimates are based on the increasingly discredited Keynesian spending "multiplier," which according to White House economist Larry Summers means that every $1 of government spending will yield roughly $1.50 in higher GDP. Ms Romer thus plugs her spending data into the Keynesian computer models and, presto, out come 2.5 million to 3.6 million jobs, even if the real economy has lost jobs. To adapt Groucho Marx: Who are you going to believe, the White House computer models, or your own eyes?